Wednesday, June 19, 2024

FD Capital Issues Report Criticising Bank of England’s Extended Inflation Management

FD Capital, a prominent boutique agency in financial recruitment, has released a report that criticises the Bank of England’s protracted inflation management approach. The report labels the Bank’s inflation strategy as “too high, too late, and now for too long,” endorsing the growing calls for a cut in interest rates in early 2024.

The firm’s research projects that the CPI inflation rate for 12 months will dip to 3.1% by March 2024. It also anticipates a rise in the 6-month CPI rate at the beginning of 2024, eventually settling at about 2%.

FD Capital’s report questions the efficacy of the Bank of England’s inflation tackling measures, suggesting that the Bank was tardy in escalating interest rates. It asserts that rates should have peaked in the summer of 2022, a year prior to when they actually did. Had inflation been raised earlier, it could have been controlled with less substantial rate hikes.

Today, the peak interest rate is unnecessarily high at 5.25%, but the report posits that it could have been limited to 3.25% if the Bank had intervened earlier. This retrospective analysis suggests that the Bank’s ‘higher for longer’ strategy would have concluded by summer 2023, potentially sparing the economy from a recession.

Defying forecasts, UK inflation in November fell more than expected to 3.9% from October’s 4.6%, largely due to a decrease in petrol prices. This development places the UK economy at a decisive point, facing either a deep recession in 2024 or narrowly escaping it. FD Capital argues that an earlier, more decisive action from the Bank of England could have averted the current economic challenges.

Moreover, the report criticises the UK government’s COVID-19 support strategies, including business loans and the furlough scheme, as major contributors to the inflation surge, more so than quantitative easing or tightening.

Financial analysts and commentators are now split on whether an interest rate decrease will occur by May, with opinions divided on a March reduction. FD Capital’s research, however, indicates that it might take an additional 9 to 12 months for the UK economy to fully absorb the consequences of what it describes as the Bank of England’s “too high, too late, and now for too long” inflation strategy.

Elliot is the Editor at ABCMoney. He manages a team that writes and contributes to many leading publications across a number of industries.

Recent Articles

Related Stories

sakarya escort bayan Eskişehir escort bayan